The Racial Wealth Audit: Policy Analysis Through a Racial Lens

Posted August 10, 2015
By the Annie E. Casey Foundation
Blog racialwealthaudit 2015

Com­mu­ni­ties of col­or face sig­nif­i­cant obsta­cles in build­ing their assets. Per­sis­tent bar­ri­ers, includ­ing exclu­sion from pub­lic pro­gram sup­port and civic under­in­vest­ment, result in unequal access to key resources, such as qual­i­ty schools and high­er edu­ca­tion. This ulti­mate­ly lim­its the abil­i­ty of fam­i­lies of col­or — in this gen­er­a­tion and the next — to move up the eco­nom­ic ladder.

The per­sis­tence of pol­i­cy-bred bar­ri­ers, along with an increas­ing con­cen­tra­tion of wealth among the rich­est U.S. house­holds, under­score a need for new poli­cies that help all fam­i­lies — par­tic­u­lar­ly those of col­or — build their assets. But enact­ing such poli­cies requires reli­able research and analy­sis to help inform decision-making.

Enter Bran­deis Uni­ver­si­ty’s Insti­tute on Assets and Social Pol­i­cy (IASP) and Dēmos. These orga­ni­za­tions have cre­at­ed a tool —called the Racial Wealth Audit™—to help advo­cates, com­mu­ni­ty groups and pol­i­cy­mak­ers find their way. This tool keeps race and eth­nic­i­ty in sharp focus while exam­in­ing how a prospec­tive pol­i­cy may affect fam­i­ly sav­ings and assets. The goal is to ensure that new and exist­ing poli­cies fos­ter asset build­ing in com­mu­ni­ties of col­or while coun­ter­ing the some­times-sub­tle dis­crim­i­na­tion that keeps wealth in the hands of the few.

Using nation­al data on house­hold wealth, the Racial Wealth Audit™ high­lights how a par­tic­u­lar pol­i­cy may impact the medi­an wealth among white fam­i­lies and fam­i­lies of col­or. The tool’s razor sharp focus on race and eth­nic­i­ty can help users iden­ti­fy — and avoid — seem­ing­ly pos­i­tive poli­cies that may have unequal effects across communities.

This con­cen­trat­ed look across com­mu­ni­ties is impor­tant. His­tor­i­cal­ly, many well-inten­tioned poli­cies have fos­tered asset build­ing in white com­mu­ni­ties, while exclud­ing fam­i­lies of col­or. (One exam­ple? The Fed­er­al Hous­ing Admin­is­tra­tion pro­grams and GI Bill, which ini­tial­ly helped a gen­er­a­tion of white fam­i­lies build their assets through home­own­er­ship and high­er edu­ca­tion but large­ly exclud­ed fam­i­lies of color).

Giv­en these real­i­ties, law­mak­ers and ana­lysts need to con­sid­er how a broad range of prospec­tive poli­cies — every­thing from tax incen­tives to edu­ca­tion and hous­ing improve­ment ini­tia­tives – may impact house­hold wealth. The Racial Wealth Audit embeds such con­sid­er­a­tion into analy­ses of poli­cies that may affect fam­i­ly bal­ance sheets. In essence, it arms pol­i­cy­mak­ers with the data and research nec­es­sary to make bet­ter-informed deci­sions and to enhance access to asset-build­ing oppor­tu­ni­ties for all families. 

In a recent report, IASP and Dēmos used the Racial Wealth Audit to exam­ine the impact that poli­cies have on the racial wealth gap in the areas of hous­ing, edu­ca­tion and labor mar­kets. This report links a num­ber of poli­cies to asset dis­par­i­ties. For exam­ple, fed­er­al hous­ing poli­cies have led to high­er lev­els of home­own­er­ship among white fam­i­lies — the result of fac­tors includ­ing hous­ing dis­crim­i­na­tion and seg­re­ga­tion — who then expe­ri­ence the greater finan­cial ben­e­fits of home­own­er­ship.

It will take a com­pre­hen­sive set of pol­i­cy ini­tia­tives to com­bat these inequities. In the exam­ple above, poli­cies designed to equal­ize home­own­er­ship rates and expect­ed ben­e­fits would sub­stan­tial­ly improve equi­table access to asset-build­ing oppor­tu­ni­ties for all families.

The Racial Wealth Audit can help the pol­i­cy com­mu­ni­ty gain invalu­able insight on how a pol­i­cy molds our nation’s wealth pat­terns. With bet­ter data and analy­sis, pol­i­cy­mak­ers, ana­lysts and advo­cates can work togeth­er to open avenues for all Amer­i­can fam­i­lies to build their assets and achieve finan­cial stability.

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